Reference no: EM131776093
Question 1 - Calculate liquidity ratios
Kroger Co.'s 2007 financial statements contained the following data (in millions).
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Current assets
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$6,755
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Accounts receivable
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$773
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Total assets
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21,215
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Interest expense
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488
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Current liabilities
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7,581
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Income tax expense
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633
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Total liabilities
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16,292
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Net income
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1.115
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Cash
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189
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Instructions - Compute these values:
(a) Working capital.
(b) Current ratio.
Question 2 - Calculate current ratio and working capital before and after paying accounts payable
The following financial data were reported by 3M Company for 2006 and 2007 (dollars in millions).
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3M COMPANY Balance sheet (partial)
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2007
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2006
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Current assets
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1.8%
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$1,447
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Cash and cash equivalents
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3,362
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3,102
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Accounts receivable, net Inventories
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2,852
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2,601
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Other current assets
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1,728
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1,796
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Total current assets
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$9,838
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$8,946
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Current liabilities
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$5,362
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$7,323
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Instructions
(a) Calculate the current ratio and working capital for 3M for 2006 and 2007.
(b) Suppose that at the end of 2007 3M management used $200 million cash to pay off $200 million of accounts payable. How would its current ratio and working capital have changed?
Question 3 - Compute net pay and record pay for one employee
Joyce Kieffer's regular hourly wage rate is $15, and she receives a wage of l'/2 times the regular hourly rate for work in excess of 40 hours. During a March weekly pay period Joyce worked 42 hours. Her gross earnings prior to the current week were $6,000. Joyce is married and claims three withholding allowances. Her only voluntary deduction is for group hospitalization insurance at $25 per week.
Instructions
(a) Compute the following amounts for Joyce's wages for the current week.
(1) Gross earnings.
(2) PICA taxes. (Assume an 8% rate on maximum of $90,000.)
(3) Federal income taxes withheld. (Use the withholding table in the text, page 497.)
(4) State income taxes withheld. (Assume a 2.0% rate.)
(5) Net pay.
(b) Record Joyce's pay, assuming she is an office computer operator.
Question 4 - Compute maximum PICA deductions
Employee earnings records for Medenciy Company reveal the following gross earnings for four employees through the pay period of December 15.
C. Ogle - $93,500
L. Jeter - $97,600
D. Delgado - $96,100
T. Spivey - $104,000
For the pay period ending December 31, each employee's gross earnings is $4,000.The PICA tax rate is 8% on gross earnings of $100,000.